New York State Department of Labor Proposes Increases to Overtime Exempt Salary Threshold

[UPDATE] On December 29, 2016, the New York State Department of Labor (“NYSDOL”) adopted its proposed rule increasing overtime exempt salary thresholds for New York employees. The new rule is set to take effect in just two days on December 31, 2016. The NYSDOL made no changes to the version of the proposed rule published on October 19, 2016 and discussed in this article. Employers in New York should plan to comply with the new overtime salary thresholds as outlined below on January 1, 2017. The United States Department of Labor’s proposed rule to increase the national overtime exempt salary threshold is still under a nationwide preliminary injunction and is set to be decided in the first half of 2017. However, this preliminary injunction had no effect on the December 31, 2016 effective date of the New York State rule.

New York City: Large Employer (11 or more)

New York City: Small Employer (10 for fewer)

Nassau, Suffolk, Westchester Counties

Other New York counties

Effective Date

Overtime Exempt Salary Threshold (salary/week)

12/31/16

$825.00

$787.00

$750.00

$727.50

12/31/17

$975.00

$900.00

$825.00

$780.00

12/31/18

$1,125.00

$1,012.50

$900.00

$832.00

12/31/19

$1,125.00

$975.00

$885.00

12/31/20

$1,050.00

$937.50

12/31/21

$1,125.00

——————————————————————————————————————

By now, most employers have heard about the changes to the overtime regulations that will increase the salary threshold for overtime exemptions under the federal Fair Labor Standards Act (“FLSA”) to $913 per week as of December 1, 2016. Recently, the New York State Department of Labor (“NYSDOL”) proposed similar regulations which would incrementally increase the salary threshold for the overtime exempt classification under New York State law as well. Depending on the size and location of the employer within New York State, the proposed incremental increases would reach up to as much as $1,125.00 per week over the next few years.

More specifically, the proposed salary thresholds will increase more rapidly for “large employers” ̶ those with eleven (11) or more employees ̶ than for “small employers” ̶ those with ten (10) or fewer employees. In addition, salary thresholds will increase more rapidly in New York City than in surrounding and upstate counties. The proposed rule would increase salary thresholds as follows:

New York City: Large Employer (11 or more)

New York City: Small Employer (10 for fewer)

Nassau, Suffolk, Westchester Counties

Other New York counties

Effective Date

Overtime Exempt Salary Threshold (salary/week)

12/31/16

$825.00

$787.00

$750.00

$727.50

12/31/17

$975.00

$900.00

$825.00

$780.00

12/31/18

$1,125.00

$1,012.50

$900.00

$832.00

12/31/19

$1,125.00

$975.00

$885.00

12/31/20

$1,050.00

$937.50

12/31/21

$1,125.00

If the proposed regulations are enacted, employers working in multiple locations in New York State may have to apply different salary thresholds depending on their employees’ location within the state. For employers doing business in New York City and Nassau, Suffolk, and Westchester Counties, the salary threshold may be higher under New York State law than under the FLSA. For example, if the incremental increases outlined above are implemented without change, the salary threshold for New York City employers with 11 or more employees will be $1,125 per week as of December 31, 2018, an amount that will considerably exceed the $913 per week salary threshold under the FLSA.

These proposed regulations are still open for public comment until December 3, 2016 and employers who wish to comment may do so either in writing or by email to the NYSDOL. In particular, comments may be sent by mail to Michael Paglialonga, New York State Department of Labor, Building 12, Room 509, State Campus, Albany N.Y. 12240 or by email to regulations@labor.ny.gov.

We will continue to monitor the progress of the proposed regulations and will provide an update when more information becomes available.

[UPDATE] On November 22, 2016, Judge Amos Mazzant of the United States District Court of the Eastern District of Texas entered a nationwide preliminary injunction halting the implementation and enforcement of the U.S. Department of Labor’s regulations that would have increased the salary threshold for overtime exemption under the FLSA on December 1, 2016. The U.S. Department of Labor has yet to announce whether it will appeal this decision. Employers with workforces outside of New York should have a plan to comply with the U.S. Department of Labor regulations, but should wait to implement any changes until a final court determination is made regarding their constitutionality. However, the injunction placing the U.S. Department of Labor regulations on hold has no effect on the NYSDOL’s proposed regulations discussed in this article, and New York employers should plan to comply with them by December 31, 2016.

*Danielle Thompson is a law clerk in Sheppard Mullin’s New York office.

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